AdKu

Thank you, Bri. I understand that the administration of ERISA is divided among DOL (Title I & Title III), IRS (Title II), and PBGC (Title IV).

Thank you, C. B. Zeller, Reading Plans Eligible for the IRS Penalty Relief Program for Form 5500-EZ Late Filers on the IRS website is perplexing because it uses the phrase "Non-ERISA plans only." Isn't an owner-only Solo 401(k) plan an ERISA plan with no testing requirements? Why is it critical to use "non-ERISA plans only"? Plans eligible One-participant plans covering a 100% owner or a partnership, and their spouses (no other participants). Non-ERISA plans only. Foreign plans subject to IRS annual reporting that are maintained outside the U.S. primarily for non-resident aliens.

Background: A potential client adopted a one-participant 401(k) plan (AKA Solo 401(k) plan) in 2015. The plan assets were over $250K by the end of 2020 and the brokerage account services provider didn't file Form 5500-EZ. Question: 1) Can this plan use the Penalty Relief Program for Form 5500-EZ Late Filers to fix the error? https://www.irs.gov/retirement-plans/penalty-relief-program-for-form-5500-ez-late-filers 2) Are there any additional things I need to take into consideration?

Thank you!

Form 5500-SF Part II Line 5(e) reads as follows: "Number of participants who terminated employment during the plan year with accrued benefits that were less than 100% vested..." Is this safe to assume, Line 5(e) doesn't apply to a 401(k) Profit Sharing Plan as there is not going to be accrued benefits? Relius Government forms accepts when I enter any number including zero or leave it blank.

Thank you, C. B. Zeller. Is there any top heavy issue as far as employees who entered to the plan "....due to a special eligibility window" but "....never worked 1,000 hours in any plan year....."?

I'm sorry, I have hard time to understand what you're trying to tell me. I understand if someone is in the plan there is no hours requirement to receive SHN. I also understand that TH min triggers gateway. But my confusion is: Ee1 is not in the DB plan and according to the attached reference Ee1 may not be eligible for cross-tested allocation because did not work 1,000. Since Ee1 is only in the DC plan, qualifies for Dc plan top heavy thereby gateway But if the plan requires more than gateway to pass the cross-test, does this mean Ee1 must receive whatever minimum % above the gateway needed to pass the cross-test? or Ee1 should not be in the cross-test (according to the attached reference) but receive gateway minimum if it is above the top heavy min? Excerpt from the attached file page 35. Cross-tested Plan Design Issue • Employee not eligible for cross-tested allocation because did not work 1,000 hours required by the plan • Employee receives 3% top-heavy as employed on last day • 5% cross-tested gateway being used by the plan. • Because the employee is benefiting at 3% (due to top-heavy), the employer must give 2% more to pass gateway test ASPPA - Advanced Top Heavy Testing and Plan Design.pdf

When the 3% Safe Harbor Non-elective (SHN) added to the plan in 2018, the eligibility to enter the SHN portion of the plan was 1 year (1,000 hours). Ee1 never worked 1,000 hours during the 1st year of employment and each plan years thereafter. Is this safe to assume Ee1 is not a participant (eligible) for SHN portion of the plan? Provided the plan must provide above the gateway minimum to passes the the DB/DC cross-test without including Ee1 in the test. Since Ee1 is eligible for Top heavy minimum thereby for gateway, is Ee1 must be in my DB/DC cross-test each plan year starting 2018? If so, does this mean that Ee1 should receive whatever percentage required to pass the cross-test, if it is above the gateway and top heavy minimum?

Thank you very much, Mike.

Background: A 401(k) plan had a safe harbor match provision with a 1 year (1,000) eligibility requirement when it was established in 2014. It has been TH for all year including the 2014 plan year. There was a one time eligibility requirement waiver amendments in 2016. Because of the eligibility waiver, an existing employee (EE1) who works under 500 hours each year entered into the plan in 2016. However, this employee never deferred any 401(k) money to receive any safe harbor match. The plan was amended in 2018 changing the safe harbor match to 3% safe harbor non-elective when the employer established a Defined Benefit plan in addition to this existing 401(k) plan. The eligibility requirement stayed the same (1 year of service) with 3% safe harbor non-elective allocation requirement of 1,000 hours during the plan year. the The aggregate plan has been TH for all plan years. Question Is this safe to assume the 401(k) plan was exempt from TH from 2014 through 2017 if the only contribution were deferrals and safe harbor match regardless of the one active employee who never deferred didn't receive any matching contribution? Is this also safe to assume the aggregate plan is not exempt from TH starting the 2018 plan year because of the DB accruals? If so, do I have to determine the plan TH status as of 12/31/2017 while the plan had deferral and safe harbor match contributions only (assuming calendar year plan) for the plan year beginning 1/1/2018 and provide TH min for EE1 for 2018 plan year and there after? Or, do I have to determine the plan TH status as of 12/31/2018 as the aggregate plan had additional contribution besides deferral and 3% safe harbor non-elective (DB accrual) for the plan year beginning 1/1/2019 and provide TH min for EE1 for 2019 plan year and there after? My biggest confusion is when should the TH min should start 2018 or 2019?

Jakyasar, thank you for your reply. I made an error on the DOB, which should have been 1/31/1958. This is how I got the 57K figure, I converted the VBRA to Individual Level Premium as follows VBRA {[ (1+0.07)5 -1 ] / (0.07)} (1+0.07) How would you calculate the Individual Level Premium to determine the very first contribution for 2019 plan year for the participant?

I’m seeking some help on Target Benefit Plan, important plan provisions and preliminary calculations are provided in the tables below. Would you please check my calculation? Target Benefit = ((Average Annual Compensation *0.45 + (( Average Annual Compensation –Covered Compensation)*0.0052*6))/12)*(6/20) VBRA = (Change TB) *(APR), the APR is 130.8344 Individual Level Premium = PMT(7%,5,0,-1*VBRA,1), for number of years I used 5 because the expected total year of service is 6 years and the participant waited one year to enter the plan. I'll be reducing the number of year each year by one. Eligibility Requirements: upon reaching age 21 and being credited with 1 Year of Eligibility Service. Normal Retirement Age: The term Normal Retirement Age means age 65. There is no mandatory retirement age under the terms of the Plan. Calculation of Level Funding Amount of Target Benefit: The Level Funding Amount for each Participant as of his effective date of participation in the Plan shall be determined using the cost produced by the Individual Level Premium funding method. The Level Funding Amount shall remain constant unless there has been a change in a Participant's Target Benefit. Target Benefit: Each Participant's stated benefit under the Plan will be equal to the Participant's Target Benefit (as described in Section 3.1(c). Each Plan Year prior to the time required by law for filing the Employer's federal income tax return (including extensions), the Employer shall make contributions to the Employer Account of each Participant who has a Year of Service for Accrual of Benefits for that Plan Year, which, when added to the Forfeitures occurring during the Plan Year, shall be an amount equal to the Level Funding Amount as calculated under Section. 3.1(c) Benefit Formula: The Target Benefit payable at Normal Retirement Date for each Participant shall be equal to the sum of 45.00% of such Participant's Average Annual Compensation; plus.52% multiplied by the Participant's total number of Years of Service, multiplied times the Participant’s excess Covered Compensation, computed to the nearest dollar. The Target Benefit is reduced one-twentieth (1/20) for each Year of Service less than Twenty.

Thank you, C.B. Zeller and all of you. You've been very helpful. If the plan required to provide the missed DC TH minimum for prior plan year and lost earnings on. What interest rate should I be used if the the DC plan fund had negative return? Is the DOL lost earning calculator for missed deferral acceptable way of determining the lost earnings on the TH minimum? If possible please include the the IRS code or Treas. Reg.

C. B. thank you for your help. I was able to find the answer from EOB. Please someone provide me the IRS code or Treas. Reg. that go over a top-heavy cross-tested plan (DB/DC plan with safe harbor non-elective contribution) with dual eligibility where otherwise excludable employees must receive a top-heavy minimum contribution thereby qualify for a minimum gateway contribution.

Thank you, Lou & C. B. Zeller, C.B.'s closing sentence reads out "therefore the plan as a whole no longer qualifies for the TH exemption". I don't think, I shall interpret this statement to mean otherwise excludable employee be included in the ADP test the rest of those statutory employees who met the 1-year of service. Is the correct? If so, the dual eligibility doesn't trigger top heavy minimum as long as there is no HCE in the otherwise excludable employee group and Safe Harbor match is the only employer contribution . Is that correct? The fact remain the same but instead of Safe Harbor Match if the only contribution was 3% non-elective Safe Harbor.